Monday, March 27, 2006

What Delta Can Learn On Opening Day

Finally, an article that
makes "baseball as a life metaphor" make sense.

Baseball's woes tell us something
important about business -- that lack of trust is a
genuine impediment to success.

By Cait Murphy,
FORTUNE assistant managing editor

March 27, 2006:
11:42 AM ESTNEW YORK - "Opening Day" may just be the
happiest words in the language.But for the last
generation, the joy of the first day of the baseball
season has come with baggage, in the form of labor
disputes, economic imbalances, and, more recently,
accusations of steroid abuse. These problems go back 25
years -- the first strike was in 1981 -- and they never
seem to get better. Why? Because, fundamentally, of a
lack of trust between the players and the owners. In the
early 1980s, management flat out lied about its
finances; in the late 1980s, the owners colluded to keep
down bidding on free agents -- a sin that ended up
costing them $280 million. A lockout in 1990; a strike
in 2004; more allegations of collusion (probably not
true this time) in the early 2000s -- the history is
poisonous. The owners have their own issues with the
players, who have been known to demand to renegotiate
contracts (although never after a bad season); to show
up out of shape; or to make outrageous demands about
when, where and how they will play.

Trust creates
common ground to negotiate over. Because there is so
little trust in baseball, the common ground is as thin
as the third base line. And that makes it all but
impossible to deal with things that are self-evidently
problems. For example, everyone with eyes could see that
players were becoming improbably large and powerful. In
1988, Boston Red Sox fans even chorused "Steroids,
steroids" at Jose Canseco. This is known as a clue.So
what did the game do? It began a testing regimen
starting in 2002 that told players when the examiners
were coming and did not release names of violators. In
short, only an idiot could get caught, and if he did
there was no penalty.But it could find a way to do no
more. The threat of Congressional action, plus the
revelations of the egregious Canseco, has since forced
the game to move beyond the symbolic.Let us concede that
way, way too many writers have a tiresome habit of
making baseball a metaphor for life, or emblematic of
the American way, or whatever. Looked at with
steely-eyed rigor, baseball is simply a business whose
product is a sport. And looked at as a business (albeit
an unusual one in that it is a self-regulating
monopoly), baseball's woes tell us something important
-- that lack of trust is not just awkward, but a genuine
impediment to success.

Or even to survival. Delta
pilots have come down to earth to protest against
another round of cuts to their wages and benefits,
picketing at airports and buying billboard space near
the company's Atlanta offices. Delta is trying to come
out of bankruptcy, and wants another $300 million+ in
concessions.The pilots union accuses the company of
"bankruptcy profiteering," and says the fliers are
simply trying "to defend a 65-year-old contractual
relationship with their company, while Delta executives
seek to destroy it." A strike is threatened.

wasn't that long ago that Delta had such good labor
relations that its employees once bought it a plane; now
it has come to this. There was no single event that
corroded trust to such a state, but one significant one
came in 2003, when then-CEO Leo Mullin took a hefty
bonus, just as he was asking for givebacks from the
workforce, federal aid and a partridge in a pear tree.
Is it any wonder that Delta pilots are balking at
accepting further pay cuts?

The point may sound
obvious, but it's worth saying: Trust is a corporate
asset that should be tended as carefully as the balance
sheet. And it has to start from the top. CEOs making
eight-figure salaries, for example, might cut back to a
mere seven figures when restructuring comes. (It is
possible to live on $5 million a year.

Pension plans should be funded before
bonuses or dividends are paid. Without a deposit of good
faith from which to draw, making it through the rough
patches is that much more difficult.And by the way, this
is the Mets' year. Play ball!

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